Deprivation of assets is the act of intentionally reducing personal wealth to avoid paying for care costs. This arises most often when a person is starting to think about residential care and hopes to qualify for local authority funding by transferring assets or otherwise reducing their capital.
What constitutes deprivation of assets?
Typical actions treated as deprivation include gifting large sums to family members, transferring property ownership, selling assets below market value or placing money in trusts to lower assessed wealth. If the local authority concludes these steps were taken to avoid care fees, they may count those assets as ‘notional capital,’ meaning you could still be responsible for care costs as though you retained the assets.
The dangers for attorneys
Attorneys acting under a Property and Financial Affairs LPA must be especially careful. These days, applying for an LPA online is straightforward, but the greater ease of making one in no way represents a relaxation of the strict rules governing its operation. Whether attorneys have been given their powers by the creation of an LPA online or by the traditional method, their actions must not conflict with the concept of deprivation.
Governing authorities
Large gifts or asset transfers without court approval can be challenged, and there are strict rules against using a power of attorney to shield assets. If deprivation is suspected, councils can investigate, refuse care funding, or escalate the matter to the Office of the Public Guardian and the Court of Protection.
Careful record-keeping and professional advice can help to avoid the consequences of improper asset transfers.